The government will award a production-sharing
contract (PSC) for the East Natuna gas field in Riau Islands
this year after reviewing a consortium's proposal for the gas project, which is
the largest in the region.

Energy and Mineral Resources
Minister Jero Wacik said in Jakarta
on Tuesday
that the request by the consortium for a five-year tax holiday was currently
the final item to be discussed before issuing the PSC.

''It is very likely that the
five-year tax holiday will be awarded to the contractor from 2024 to 2029,'' he
said.

The East
Natuna gas field is expected to begin production in 2024, with the
estimation that it would take 10 years for the consortium members to explore
the field.

The peak production for East Natuna is estimated to reach 4,000 million standard
cubic feet per day (mmscfd) of gas for at least 20 years before supplies begin
to decline.

The government's approval of
the principal of agreement (PoA) signed by the consortium members ' state-owned
oil and gas firm PT Pertamina, US-based ExxonMobil, France's Total SA and
Thailand's PTT Exploration and Production (PTT EP) ' has been postponed several
times.

The PoA was initially signed
by the consortium's members in August 2011, when Malaysia's Petronas was still part
of the consortium. Petronas was replaced by PTT EP last year.

The PoA, which relates to
the development of the East Natuna field,
formerly known as the Natuna D-Alpha block, is an essential step before the PSC
for the block can be signed.

Initially, the Natuna PSC
was due to be signed in October 2011, before it was postponed until mid-2012.
It was then postponed again until November 2012 and, finally, to this year. The
PoA must be approved by the finance minister.

The East Natuna block has
total proven reserves of 46 trillion cubic feet (tcf), making it the largest
gas reserve in Asia.